Exempt Employee

Rockie · May 2001

I have an employee who is classified as exempt (Controller) but due to a previous "agreement", she only works 36 hours week. The problem is, if she works over this alloted time,she "banks" it up and comps it out. Of course, this is not allowed for an exempt level person, but nevertheless, this was the "agreement". What my question is: Can this person be classified as an hourly person and be required to clock in and out since she only wants to adhere to a 36 hour/week schedule? My concern is that by allowing her to bank up compensatory time,she is actually being treated as an hourly person. If there is a period of time where she works over 40 hours a week, then she could (if she wanted to) come back on us and say that we owe her overtime since we are, for all practical purposes, treating her as an hourly person. I don't know if anyone else out there has exempt level people working on these type schedules or not, but I would be interested in knowing how you handle it. Thanks!

PMI · May 2001

If it's a written agreement, specifying the 36 hour work schedule and the provision of compensatory time for working over 36, you are could be stuck. I have a few employees who are salaried and work fewer than full time scheduled hours. Our agreement with all exempt staff, which we put into writing via the offer letter, our handbook, and the job description, is that they are being paid an annual salary to perform a specific job, to specific quality and productivity standards. The understanding, up front, is that they will receive this salary (and remain in our employ) so long as the standards agreed to are maintained. We do not allow comp time, however we also do not make a big deal out of it when these employees work fewer than their scheduled hours. Our attendence & performance management programs addresses issues of abuse.

Rockie · May 2001

Thanks for your help. In South Carolina, there is no such thing as compensatory time for private employers - only public employees,firefighters and policeman can accrue comp. time. As with most exempt people, we don't hold them to a time clock, but do expect them not to abuse their exempt status by taking off every Friday afternoon, etc. This person I am speaking of actually keeps a log of the hours she works over 36 and expects to be able to take them off when she feels like it. I feel this is putting her exempt status at risk and is inappropriate. Otherwise, all exempt people should be allowed this luxury. Thanks for your comments!

System · May 2001

I, too, work a flex schedule of 34 hours a week. My employer and I agreed when I was hired that if I was needed to work more than 34 hours that I would do so with no increase in pay. We knew before I was hired that certain periods of the year would be busy times, such as during medical reenrollments and we both agreed. I think I would speak to the controller and let her know that she is an exempt employee that under an exempt status, her pay remains the same whether she works 36 hours a week or 56 hours a week.

Hope this helps.

Rockie · May 2001

This does help a lot. If you work over the alloted 34 hours/week, you don't expect to comp out the time, correct? Thanks for your help. This will certainly give me some leverage.

CuriousG · May 2001

Rockie, I think that the issue here is does your Controller want to be an exempt/salaried employee, or a nonexempt hourly employee? You should politely, and directly address this issue with her, and point out that the "agreement" she had is an illegal one under both State and Federal law.

If she wants to be Exempt, then she should expect to work the number of hours the job requires each week to accomplish the assigned duties, whether it is 20, 30, or 50. If she wants to be nonexempt, then she should expect to only be paid for the actual hour worked each week, and when these fall below her 36 hour schedule, she will see a reduction in her weekly paycheck.

In either instance, the "comp-time" she is expecting is an illegal arrangement, and should be brought to a close. If she truely is the Controller of your organization she traditionally would have a fiduciary liability to the company to ensure that State and Federal Wage and Hour Laws are adherred to, both in her employment as well as any other employee's situation.

dhnyct · May 2001

Since exempt status is determined by job functions, how can it be at the discretion of the employee?

JAthey · May 2001

Just because someone performs exempt functions does not make them exempt. They have to also be paid on a salaried basis. There is no requirement (under federal law, anyway) that you pay employees who perform exempt tasks on a salaried basis.

Mikki H · May 2001

We have had a few problems in this area with our administrative staff (our medical staff causes no hours per workweek issues). We have put in our new hire entrance interview and our "new hire" memo that the employee signs the fact that they are salaried-exempt, not subject to overtime rules and that they are expected to "average" 40hrs/wk during the normal workweek of M-F, 8a-5p.

We do say that "comp" is allowed but generally if sometimes stays over one day, they may leave early later on in the week (we try to look at everything week to week). They do not record hours worked and there is no formal counting of hours and taking it hour for hour. We believe that we are getting more than 40 hours out of each exempt employee. We only have one special allowance with working a special event on a weekend. If a full day is spent at a seminar or health fair, then a full day during a M-F week can be taken off. We still expect to reach the 40hr average.

Diane in FL · October 2001

Hi Rockie - I've read through a few of the responses, and wanted to let you know that while there is actually a restriction on how you pay exempt vs. non-exempt positions. Using the short or long tests available through the federal Dpt. of Labor, you will notice that specific position types are by definition salaried or hourly, because of how you must figure the pay. Those not meeting the tests for an exemption from overtime, must be paid overtime - meaning, you figure their rates of pay by the hour. Exempt status positions, on the other hand, are not paid by the hour, but quoted an annual rate or weekly rate (preferably weekly rate, as you must pay these people a full check whether they work one hour or 80 hours in one week).

I would recommend you first detail this person's actual duties. Basically, you are looking to determine if the person falls under one of the White Collar Exemption sub-categories: Executive, Administrative (& Sole Charge) or Professional. Since you describe the position as a Comptroller, I'd start with the Short Administrative test. This test is:

1 - Position is compensated on a salary or fee basis of at least $250 a week;

2 - Spend at least 51% of working time performing a combination of the following primary duties: non-manual (meaning: thinking, not doing) office work directly related to management policies or general business operations; or performing functions in the administration of an educational establishment, which are directly related to academic instruction or training; and

3 - Perform work requiring the exercise of discretion and independent judgment (meaning: does not need approvals for hiring/firing, spending - after approved budget, etc.)

Basically, if work is routine, then it is not exempt-level work. If you have or make any "agreement" to pay a person meeting the above (or any exempt) standard by the hour, then you as the employer forfeit the exemption on that position as a whole (meaning everyone with that title forfeits the exemption), and you must pay that person overtime whenever s/he goes over the agreed or policy standard hour amount. That means, if you pay non-exempts overtime by the day, then you'll have to do so with this position. If by the week, then the same, and so on. That can get awfully expensive.

Also, an employee cannot choose to be exempt or non-exempt, as that status is determined strictly by the duties performed as noted under FLSA.

Good luck!

Exempt Employee

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